Help...... Tax Credits

sweedart1

Hi Everyone,

I went BR 30/05/07, which i have to say was the best thing i have ever done!!! But today i have received a letter from the tax credit people to tell me i owe them £1800 as i have received to much tax credits. This is all i need worrying about paying this money back. Just need a bit of advice really on what to do? I doubt it can be included in my BR? or can it? I will get intouch with my OR on mon.

Thank You for all your help and support.

Sweedart1

fermi

The relevant guidance the OR should work from is this, I think.

Recovery of overpaid credits after a bankruptcy order is made

In certain circumstances a tax credit may be overpaid and thereafter a recovery may be sought by HMRC. That recovery may be achieved by deductions made from ongoing awards of tax credits or by direct collection where there is no ongoing award of tax credits or where the ongoing award has ceased.
Where tax credits have been overpaid and a bankruptcy order is subsequently made against the claimant, whether or not the overpayment is a provable debt in the bankruptcy depends on the circumstances of the case as follows:

Final award notice (of repayment) issued before the date of the bankruptcy order.

* If the recovery is made, or would have been made, by direct collection (in cases where there is no ongoing award of tax credits), HMRC will submit a proof of debt in the bankruptcy, considering the debt to be a provable one.

* If the recovery is made, or would propose to have been made, by deductions from ongoing awards of tax credits, HMRC will not submit a proof of debt in the bankruptcy but will continue to make the collections from the ongoing award of tax credits until the bankrupt’s discharge from bankruptcy. Thereafter the balance of the debt will be written off. This action, of continuing to recover the debt post bankruptcy, follows the decision in the case of R v Secretary of State for Social Security, Ex Parte Taylor and Chapman [note 1]which provided that where a bankrupt was indebted to the Secretary of State for Social Security in respect of debts arising from earlier receipts of social security benefits, he/she was entitled to deduct sums from future benefits to be received thereafter in reduction of that indebtedness. Should any bankrupt object to the taking of the ongoing recovery action by HMRC in this way, they should be referred to that Department without further comment by the official receiver.

In all cases where a final award notice (of repayment) has been issued by HMRC before the date of the bankruptcy order, the debt should be added to the list of creditors and HMRC treated by the official receiver as a creditor in the usual way.

Final award notice (of repayment) issued after the date of the bankruptcy order.

* Where a final award notice (of repayment) is issued by HMRC after the date of a bankruptcy order, whether the recovery action be considered by direct collection or from the ongoing award of tax credits, the bankrupt will be pursued by HMRC in the usual way even though the over-paid tax credits arose before the date of the bankruptcy order. This follows the decision in R (on the application of David William Steele) v Secretary of State for Work and Pensions [note 2]. In these circumstances the debt will not be included in the list of creditors. See also Chapter 40 Part 6 - Creditors and liabilities. .

If the the letter you have received constiitues the "Final award notice (of repayment)", then it looks like they probably can't be included as stated in the 3rd section.

However your OR should be able to tell you for certain, and you should let them know about this ASAP.

debt_doctor

Thats an excellent answer from Fermi, but sadly not good for your position. You must tell the OR asap.

What was the reason given for the overpayment ? Not all overpayments are recoverable. Please put the info on here and we ll have a look at it.

Best wishes,

DD

Conor_3

Usually the reason for overpayment is not informing them of a change in circumstances which is quite understandable when you're up to your eyeballs in debt and you know that doing so would reduce the amount they pay every month. It must be a hell of a hard decision because you know it'll bite you down the line.

OTOH, there's a maximum limit, done as a percentage, that they can recoup the money at from your existing claim so you won't be left with nothing.

debt_doctor

Hi, if the only reason an overpayment has occurred is an 'in year rise of income' of £ 25,000 or less then the overpayment is not recoverable. For most other reasons the overpayment will be recoverable.

Cheers

DD.